Real Estate Investing Links for January 27, 2010

The Real Estate Economy Watch reports on the continued decline of home prices, but retains hope for the future in that prices are expected to level off later this year. The article documents this trend’s impact on the housing industry, such as the development of discouraged home buyers, and homeowners unable to “trade-up” due to the loss of equity in their current homes. Author David Lerean mentions the dilemma faced by investors to either avoid properties losing value or to buy at massive discounts. Lerean continues to reflect on the expected and unexpected effects falling prices have had on the housing crisis.

Months of slowing commercial construction may result in an apartment shortage this year, according to the National Association of Home Builders. Due to the credit crisis it looks as though the industry will struggle to meet “increased need for…affordable apartments…expected to accompany economic recovery,” notes an article from RECON. Although vacancy rates remain high, experts expect this to change as unemployment falls.

“FHA Rule Book Changes”

The Mortgage Reports cover recent amendments to FHA guidelines that make it ever more difficult to acquire a loan. In response to the FHA’s “dwindling capital reserves” borrowers must now “look better on paper and have more cash at closing.” As expected, the insurance premium for mortgages will increase, but there will be no increase of the minimum down payment. The article also addresses the concept of “investor overlay-” the idea of banks beginning with FHA guidelines but then later adding their own rules to further reduce their risk. This practice is sure to continue, given a new rule that will close any bank whose “defaults exceed the mean by a certain number of sigmas”

The prices of Dallas’s single family homes have increased 1.4% since last November, according to the Case-Schiller home price index- placing the city as the list’s top performer for the month. Dallas, Denver, and San Diego reached “positive territory” for the first time in 2 years, while prices in other cities such as Las Vegas and Tampa continue to decline. The Dallas Morning News reports that despite Dallas’s performance, these statistics cannot be taken as an indication of “broad based recovery.”

The National Real Estate Investor expands on the prediction of multifamily rent spikes resulting from a shortage of new inventory. Doctor Victor Calanog suggests now is the time to invest in multifamily, as the still appealing pricing, and easier financing, form unusual investment opportunities when paired with the imminent upswing in rental rates. The article continues to list why a combination of previously high vacancy rates, lowered asking rents, and loan defaults, have now led to prime investing opportunities.

“Getting Started as a Bulk REO Investor”

Creative Real Estate Investing covers the basics of the foreclosure process to stress investing opportunities that lie in bulk REO investing. Once a borrower misses payments on their home and after the subsequent warnings, the property enters into pre-foreclosure. The lender then obtains properties not sold at auction. They are usually then resold to the public but are sometimes available at huge discounts to investors who are willing to buy multiple at once. Read the original article for more detailed information.

Life as Real Estate Investor’s Julie Broad navigates the delicate balance between too low and too high rents. The first step is to look around the area, which you can do at home using the list of websites included in the article. While you can gain a lot of valuable information this way, the author suggests physically going to the property to better evaluate its amenities and location. Next, refer to specialists such as realtors and property managers to provide a ball park figure of what similar properties rent for. Although she advocates staying “in the middle of your neighborhoods rental range,” Broad urges you to know why properties rent as they do for a clearer perspective on how much to charge.

Brian Lee’s article “How 15 Rent Houses can Retire You Faster than a $1 Million 401k” has won a spot on a personal finance blog carnival’s list of best weekly articles, hosted by The Skilled Investor. Congratulations Brian!

We’d love to hear from you! If you become aware of any interesting and valuable articles or blog posts, please email them to us at webmaster@luinc.com.

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